Aggregate Limit vs. Per-Occurrence Limit

Most general liability policies carry two limits working together: a per-occurrence limit (the cap on any single claim) and an aggregate limit (the cap on all claims combined during the policy term, typically 12 months). A common structure is $1,000,000 per occurrence and $2,000,000 aggregate.

How the Aggregate Limit Erodes Over the Policy Year

Every paid claim reduces the remaining aggregate for the rest of the policy period. If a business has three claims of $600,000 each on a $2,000,000 aggregate policy, only $200,000 of aggregate coverage remains for any additional claim that year, even though each individual claim was well under the per-occurrence limit.

Once the aggregate is exhausted, the business is fully exposed for any further covered loss until the policy renews, unless it purchases additional coverage mid-term.

Why This Matters

Businesses with higher claim frequency, such as contractors, staffing agencies, or companies with a lot of public foot traffic, are more likely to run through an aggregate limit than businesses that rarely file claims. Choosing an aggregate limit based only on "what's the worst single incident that could happen" ignores the real risk of several smaller claims stacking up in one year. This is one of the reasons a commercial umbrella policy exists: it adds another layer of aggregate limit above the primary policy once that limit is used up.